BILL NUMBER: SB 1805	CHAPTERED  09/30/00

	CHAPTER   997
	FILED WITH SECRETARY OF STATE   SEPTEMBER 30, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 29, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	AMENDED IN ASSEMBLY   AUGUST 31, 2000
	AMENDED IN ASSEMBLY   AUGUST 30, 2000
	AMENDED IN ASSEMBLY   AUGUST 29, 2000

INTRODUCED BY   Senator Escutia

                        FEBRUARY 23, 2000

   An act to amend  Section 734.1 of, and to add Section 12938 to,
the Insurance Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1805, Escutia.   Market conduct examinations.
   Existing law provides for the licensing and regulation of insurers
by the Insurance Commissioner.  Existing law provides that the
commissioner has the power to examine and investigate into the
affairs of every person engaged in the business of insurance in this
state, generally known as a market conduct examination in order to
determine whether the person has been or is engaged in any unfair
method of competition or in any prohibited unfair or deceptive act or
practice.  Existing law also provides that the commissioner has the
power to examine the business and affairs of an insurer relative to
its financial condition and ability to fulfill its obligations, and
compliance with all laws applicable to its insurance transactions.
Existing law provides that certain information obtained or produced
by the department with respect to insurer examinations and
investigations is confidential and not subject to disclosure, except
as specified.
   This bill would require the commissioner, if he or she suspends or
terminates an examination that includes an examination of claims
practices, to send a copy of the complete file to the State Bureau of
Audits, and would require the State Auditor to audit the file and
make a determination on the propriety of the termination or
suspension.
   This bill, notwithstanding any other provision of law, would
require the commissioner to make information concerning the
resolution of market conduct examinations and the contents of every
adopted report of an examination that pertains to unfair or deceptive
business practices, as defined, available for public inspection and
on the department's web site, as specified.  This bill would require
the information to be maintained in a current up-to-date condition.
This bill would require all identifying and privileged information
regarding individual policyholders to be redacted from the
information or reports available to the public.  The bill would
permit an insurer to furnish comments regarding an adopted report of
an examination, as specified, for publishing on the web site.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 734.1 of the Insurance Code is amended to read:

   734.1.  (a) No later than 60 days following completion of the
examination, the examiner in charge shall file with the department a
verified written report of the examination under oath.  Upon receipt
of the verified report, the department shall transmit the report to
the company examined, together with a notice that the company has 30
days to make a written submission or rebuttal with respect to any
matters contained in the examination report.
   (b) Within 30 days of the end of the period allowed for the
receipt of written submissions or rebuttals, the commissioner shall
fully consider and review the report, together with any written
submissions or rebuttals and any relevant portions of the examiner's
workpapers, and shall either adopt the report as filed or with
modifications or corrections, or reject the report with directions to
the examiners to reopen the examination for purposes of obtaining
additional data, documentation, or information, and refiling pursuant
to subdivision (a).
   (c) (1) Nothing contained in this article shall be construed to
limit the commissioner's authority to terminate or suspend any
examination in order to pursue other legal or regulatory action
pursuant to the insurance laws of this state.
   (2) If the commissioner terminates or suspends an examination that
includes an examination of claims practices, the commissioner shall
within 10 days of the termination or suspension transmit a copy of
the complete examination file to the State Bureau of Audits.  The
State Auditor shall audit the file pursuant to Section 10527 of the
Government Code to determine the propriety of the termination or
suspension.
  SEC. 2.  Section 12938 is added to the Insurance Code, to read:
   12938.  Notwithstanding any other provision of law, the department
shall make available for public inspection and publish on its
website all of the information described in subdivisions (a) and (b).
  This information shall be maintained in a current, up-to-date
condition.  All identifying and privileged information regarding
individual policyholders shall be redacted from documents available
for public inspection and on the website.
   (a) All fully executed stipulations, orders, decisions,
settlements, or other forms of agreement resolving market conduct
examinations, whether the examinations were finalized, terminated, or
suspended, that pertain to unfair or deceptive practices in the
business of insurance as defined in Section 790.03.
   (b) (1) Every adopted report of an examination of unfair or
deceptive practices in the business of insurance as defined in
Section 790.03 that is adopted as filed, or as modified or corrected,
by the commissioner pursuant to Section 734.1.
   (2) The commissioner upon adopting the report shall by certified
United States mail transmit a copy of the report to the examined
insurer's designated agent for service of process.  Within 10
business days after the transmittal, the examined insurer may submit
comments to the commissioner relating to the adopted report.  The
comments shall be in a form and length as provided by regulation.
   (3) Ten business days after the transmittal the commissioner shall
publish on the department's website the adopted report and any
comments submitted by the examined insurer unless a court of
competent jurisdiction has stayed the publication of the report.
   (c) This section may not be construed to require the disclosure of
company workpapers or other company documents discovered during the
course of an examination or any preliminary report of the
examination, except as otherwise permitted by law.
